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Focus on… Product Liability Insurance

Focus on… Product Liability Insurance

Over the last few months, we have looked at the ins and outs of various different types of insurance which we can offer as part of a comprehensive business policy, whichever industry you are in. This month we turn our attention to Product Liability Insurance.

What is Product Liability Insurance?

Product liability insurance is a type of insurance which is designed to cover your business against the cost of any compensation claims arising in the event that someone is injured or their property is damaged by any ‘product’ which you have provided. In certain circumstances, your business may be subject to a compensation claim, even if you haven’t manufactured the product.

What’s covered?

If a customer sustains injury or damage caused through a product which has been manufactured by you, as the manufacturer you bear the responsibility for this and could be sued for compensation. Your product Liability Insurance would cover any compensation payout as well as the legal fees, the extent of which would be limited to the extent of your policy cover.

There may be some circumstances where, even if you are not the manufacturer of the product, you may still be liable for the cost of compensation/damages. An example of this would be if the product is branded with your name or if you have repaired or reconditioned it. In some circumstances, if the original manufacturer could not be identified or was out of business, the liability may pass on to you. As well as the repair or replacement of goods compensation may take into account property and loss of earnings due to injury. Combined with the cost of defending a legal action, claims of this nature could run into many thousands of pounds and present a real risk to your business if uninsured. There is no upper limit for compensation payments so it is recommended that all businesses who supply products ensure that they are adequately protected against potential claims. Under the law governing consumer protection as well as the manufacturer holding the main responsibility, it is also possible for suppliers, retailers and distributors to be held responsible for their product.

Product liability insurance can be offered as part of a combined business policy or as part of a public liability policy if required.

Is product Liability Insurance a legal requirement?

It is not a specific legal requirement for businesses to hold product liability insurance (for more information on what is legally required see our previous blog – What Liability Insurance is necessary for business? ). It is a legal requirement for manufacturers to ensure that their products are safe for consumers. It may also be the case that suppliers and retailers may require a manufacturer to hold product liability insurance before they will do business.

For more information on Product liability insurance or to discuss your business insurance requirements with an expert broker – just get in touch with GM insurance.

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